Seventh Annual Willem C. Vis.

International Commercial Arbitration Moot

1999 / 2000

MEMORANDUM FOR THE CLAIMANT

On behalf of
Feed Processing Corp.
123 Industrial Avenue
Highlands
Mediterraneo

Claimant

Against
Grain Dealers, PLC
26 Export Pl.
Southside City
Danubia

Respondent

University of Copenhagen

Faculty of Law

Team Members:

Shian V. Jones-Mortensen * Beatrice J. Joseph * Lone Løschenkohl

Morten Schwartz Nielsen * Lisbet Vedel Olsen * Simon Andreas Winkler


Table of Contents

Index of Authorities

Index of cases

Index of legal sources

MEMORANDUM

1. The written statement of Mr. Dean should be admitted with full weight

1.I. The written statement of Mr. Dean is admissible, as it is relevant to the issues in dispute and fulfils the formal requirements for admission in Art. 20.3 LCIA and is required to state the facts necessary to make a fair and impartial award

1.I.1. Mr. Dean's statement is relevant, as it is directly related to the issues in dispute

1.I.2. Mr. Dean's statement is admissible under Art. 20.3 LCIA, as it is in writing and signed and, as Mr. Dean can give evidence in the dispute according to Art. 20.7 LCIA

1.I.3. The statement of Mr. Dean is required to state the facts necessary to make a fair and impartial award

1.II. The written statement of Mr. Dean should be given full weight as there is no reason to question Mr. Dean's credibility in regard to the statement

1.III. The Claimant should not be ordered to produce Mr. Dean at the hearing, as the Claimant is not able to compel Mr. Dean to appear since he is no longer employed by the Claimant and as it can be expected that Mr. Dean will be biased due to the litigation between the Claimant and Mr. Dean

2. A binding and enforceable arbitration agreement has been concluded between the Claimant and the Respondent

2.I. A binding arbitration agreement was concluded, as the parties have concluded a contract of sale, which contained an arbitration clause, as the clause was incorporated by reference to the Danubia Feed and Grain Association Standard Conditions of Sale No. 5

2.II. The arbitration agreement has formal validity, as the "in writing" requirement in Art. II (2) of the New York Convention and Art. 7 (2) of the UNCITRAL Model Law has been met

2.II.1. The "in writing" requirement in Art. II (2) of the New York Convention has been met, as the agreement to arbitrate was contained in an exchange of letters

2.II.2. The "in writing" requirement in Art. 7 (2) of the UNCITRAL Model Law has been met, as the contract referred to a document containing the arbitration clause and as the contract was in writing in the meaning of Art. 7 (2) of the UNICTRAL Model Law

2.II. 3 Alternatively, the "in writing" requirement in the New York Convention and the UNCITRAL Model Law is fulfilled, as it is evidenced that the arbitration clause is contained in a document which formed part of the contract

2.III. In the alternative, the parties have entered into an arbitration agreement regardless of whether there is a contract of sale between the Claimant and the Respondent by virtue of the Dow Chemical doctrine

2.III.1. Whether the arbitration agreement should be extended to include the Claimant shall be determined according to international commercial rules of law, as the agreement to arbitrate is independent of the contract of sale and as case law has applied these rules of law and as this is an international commercial dispute

2.III.2. According to the Dow Chemical doctrine the arbitration agreement can be extended to include the Claimant, as the Claimant and Food Imports formed a corporate group and the Claimant was the active and effective participant of the contract, which contained the arbitration clause

2.IV. If the Respondent should object to the Tribunals jurisdiction, the Claimant submits that the Tribunal has competence to rule on its jurisdiction in accordance with Art. 23.1 LCIA and Art. 16(1) MAL

3. There has been concluded a contract of sale between the Claimant and the Respondent

3.I. The contract was concluded orally during the telephone conversation on 19 February 1998, as the Respondent's representative Mr. Stern's statement as to price and method of delivery constituted an offer and the Claimant's representative Mr. Dean's statement constituted an effective acceptance

3.I.1 The quotation was sufficiently definite to constitute an offer pursuant to Art. 14(1) CISG, as the goods, the quantity and the price were determined and it indicated the Respondent's intention to be bound in case of acceptance, as this would be the understanding of a reasonable person in the given circumstances

3.I.2. The Claimant's statement was an acceptance of the offer, since it indicated assent in accordance with Art. 18(1) CISG, as the Claimant accepted the price quoted by the Respondent and the acceptance was effective, since the indication of assent reached the Respondent in accordance with Art 18(2) CISG.

3.II. The contract concluded on 19 February 1998 was entered into between the Claimant and the Respondent, as it was the intention of the parties that the Claimant and not Food Imports should be a party

3.II.1. The Respondent knew or ought to have known that the Claimant was the purchasing party, as this was evident from Mr. Dean's statements during the telephone conversation and the subsequent conduct of the parties

3.II.1.a. As Mr. Dean informed the Respondent on 19 February 1998 that he was now working for the Claimant the Respondent knew or ought to have known that the Claimant was the purchasing party

3.II.1.b. The subsequent conduct of the parties evidences that the Respondent, on 19 February 1998, knew or ought to have known that the Claimant was the purchasing party

3.II.1.b.1. The confirmation letter of 20 February 1998 was on the stationery of the Claimant

3.II.1.b.2. The Respondent sent its original correspondence regarding the contract to the Claimant from 5 May 1998

3.II.1.b.3. The letters from the Claimant stated that there was a contract between the Respondent and the Claimant

3.II.I.b.4. The Respondent's request of 21 May 1998 to the Claimant for a modification of the contract was a request that only contracting parties could comply with in accordance with Art. 29 CISG

3.II.1.b.5. The Respondent continued negotiations with the Claimant regarding modification of the letter of credit upon the receipt of the letter of credit issued for the account of the Claimant

3.III. Alternatively, a contract was concluded on 20 February 1998, as the Claimant's letter of confirmation had binding contractual effect, as there had been negotiations with a content that led the Claimant to believe that a contract was concluded and, as the Respondent failed to object clearly in accordance with the principle of good faith

3.III.1 The Claimant's letter of 20 February 1998 has binding contractual effect unless clearly objected to due to the negotiations prior to the conclusion of the contract

3.III.2. The Respondent failed to object to the Claimant's letter of 20 February 1998, as the letter of 24 February 1998 did not clearly state that the Claimant was not party to the contract

3.IV. In the second alternative, the contract was concluded on 29 May 1998 at the latest, as the Claimant on that date by opening the letter of credit acted in reliance that a contract was concluded

4. The Respondent Was in Breach of the Contract

4.I. The Respondent was in breach of the contract pursuant to Art. 30 CISG by failing to deliver the wheat at the agreed time of delivery and by failing to deliver the agreed amount of standard feed wheat

4.I.1. The Respondent's failure to make delivery on July 1998 was a breach of the contract pursuant to Art. 33(b) CISG

4.I.2 The Respondent's failure to deliver 6,000 tons of wheat was a breach of the contract pursuant to Art. 35 CISG. 19

4.II. The Respondent's refusal to deliver constituted an unjustifiable avoidance of the contract, as the Claimant was not in anticipatory breach of the contract and, as the Claimant had not committed a fundamental breach of the contract

4.II.1. The Respondent could not avoid the contract on 16 June 1998 pursuant to Art. 72(1) CISG, as there was no anticipatory breach of contract by the Claimant

4.II.2. The Respondent could not avoid the contract on 16 June 1998 pursuant to Art. 64 CISG, as the Claimant's refusal to take partial delivery was not a fundamental breach pursuant to Art. 25 CISG

5. The Claimant is entitled to $90.000 in damages and interest hereof

5.I. The Claimant is entitled to damages for its replacement purchase pursuant to Art. 75 CISG, as the Claimant had avoided the contract by making the replacement purchase and this purchase was made in a reasonable manner and within reasonable time after avoidance

5.I.1. The Claimant avoided the contract pursuant to Art. 72(1) CISG, by making a replacement purchase as the Respondent's declaration made it clear that the Respondent would commit a breach and this breach was fundamental pursuant to Art. 25 CISG

5.I.1.a. The declaration was an anticipatory breach

5.I.1.b. The breach was fundamental, as it substantially deprived the Claimant of what it was entitled under the contract

5.I.1.c. The Claimant was not under an obligation to give notice of avoidance under Art. 26 CISG, as it was evident that the Respondent was not going to perform the contract

5.I.2. The replacement purchase was made in accordance with Art. 75 CISG, as it was made two days after the repudiation by the Respondent and at the current market price

5.II. In the alternative, damages can be claimed under Art. 74 CISG, as the Claimant suffered a loss as a result of the Respondent's breach of the contract

5.III. The Claimant is entitled to interest on the $90,000 in damages, as this would fully compensate the Claimant's loss and interest should be calculated from the time the replacement purchase was made

5.III.1. The Respondent is liable to pay interest on damages according to Art. 78 CISG, as the Claimant could not dispose over the $90,000 from 18 June 1998 and could thus not earn an interest on the amount from this time

5.III.2. The interest is to be calculated from 18 June 1998, as the Claimant's loss occurred on this date

5.IV. The Claimant mitigated its loss, as it bought the replacement wheat immediately and at the current market price, and there was no duty to accept partial delivery

5.IV.1. Claimant's replacement purchase was a reasonable measure in the circumstances pursuant to Art. 77 CISG, as the replacement purchase was made two days after the repudiation and at the current market price

5.IV.2. The Claimant was not under a duty to accept partial delivery, as it would have resulted in unreasonable inconvenience for the Claimant

5.V. The Respondent can not be exempted from liability pursuant to Art. 79 CISG, as there was no impediment and any alleged impediment was not beyond the Respondent's control and the Respondent could have foreseen it or avoided its consequences

5.V.1. The Respondent is liable for the breach, as the floods, the Danubian government's export prohibition and system of export permits, and the fluctuations in the world market price for standard feed wheat were not barriers to performance amounting to an impediment

5.V.2. Any alleged impediments were not beyond the Respondent's control as the Respondent could decide how to allocate the wheat among its customers

5.V.3. The Respondent could reasonably be expected to take the fluctuations in the world market price of standard wheat into account at the time of the conclusion of the contract, as it was a foreseeable event

5.V.4. The Respondent could have avoided or overcome any alleged impediments or its consequences, as the Respondent could have supplied the wheat either by using the allocation given by the government or by purchasing the additional wheat on the world market

6. The Tribunal is respectfully requested to order the Respondent to pay the costs of the arbitration as well as the legal costs incurred by the Claimant, as the Claimant's case was justified

Conclusion


Index of Authorities

Berger, Karl Peter International Economic Arbitration
Kluwer Law and Taxation Publishers, 1993
[cited as: Berger]
Bernstein, Herbert/
Lookofsky, Joseph
Understanding the CISG in Europe
Kluwer Law International, 1997
[cited as: Bernstein/Lookofsky]
Bianca, Cesare Massimo/
Bonell, Michael Joachim
Commentary on the International Sales Law
- The 1980 Vienna Sales Convention
Giuffré, Milan, 1987
[cited as: Bianca/Bonell]
Bonell, Michael Joachim A New Approach to International Commercial Contracts: The UNIDROIT-
principles of International Commercial Contracts
[cited as: Bonell]
Dixon, Martin Textbook on International Law
Third Edition, 1996
Blackstone Press Ltd.
[cited as: Dixon]
Enderlein, Fritz/
Maskow, Dietrich
International Sales Law
United Nations Convention on Contracts for the
International Sale of Goods
Oceana Publications, New York, 1992
[cited as: Enderlein/Maskow]
Herrmann, Gerold Does the World Need Additional Uniform Legislatation on
Arbitration?
Arbitration International, Volume 15, No. 3, 1999
The Journal of LCIA Arbitration International
[cited as: Herrmann]
Holtzmann, Howard M./
Neuhaus, Joseph E.
A Guide To The UNCITRAL Model law On International Commercial
Arbitration
Kluwer Law and Taxation Publishers, 1989
[cited as: Holtzmann/Neuhaus]
Honnold, John O. Uniform Law for International Sales
Third edition, 1999
Kluwer Law International
[cited as: Honnold I]

Uniform Law for International Sales under the
1980 United Nations Convention
Second edition, 1991
Kluwer Law and Taxation Publishers
[cited as: Honnold II]

Honsell, Heinrich Kommentar zum UN-Kaufrecht
Springer; Berlin, Heidelberg, New York, 1997
[cited as: Honsell-reviser]
Kaplan, Neil Is the Need for Writing as Expressed in the New York Convention
and the Model Law Out of Step with Commercial Practice?
Arbitration International, Vol. 12, No. 1, 1996
The Journal of the London Court of International Arbitration
[cited as: Kaplan]
Lookofsky, Joseph Understanding the CISG in Scandinavia
DJØF Publishing Copenhagen, Denmark, 1996
[cited as: Lookofsky I]

Transnational Litigation and Commercial Arbitration-
A Comparative Analysis of American, European, and International
Law
Transnational Juris Publications, Inc.
DJØF Publications, Copenhagen, Denmark, 1992
[cited as: Lookofsky II]

Magnus, Ulrich Die allgemeinen Grundsätze im UN-Kaufrecht
In: Rabels Zeitschrift für ausländisches und internationales Privatrecht
1995, pp. 469-494
[cited as: Magnus]
Mustill, Sir Michael J/
Boyd, Stewart C.
Commercial Arbitration
Second Edition, 1989
Butterworths
[cited as Mustill/Boyd]
Redfern, Allan/
Hunter, Martin
Law and Practice of International Commercial Arbitration
Sweet & Maxwell, 1997
[cited as: Redfern/Hunter]
Reynolds, Michael P. Arbitration. Lloyd's List Practical Guides.
Lloyd's of London Press Ltd., 1993
[cited as: Reynolds]
Rimke, Joern Force majeure and hardship: Application in international trade practice
- With specific regard to the CISG and the UNIDROIT Principles of
International Commercial Contracts
(http://www.cisg.law.pace.edu/cisg/biblio/rimke.html)
[cited as: Rimke]
Robert, Jean Administration of Evidence in International Commercial Arbitration
Published in Yearbook Commercial Arbitration 1976, Kluwer Law
[cites as: Robert]
Schlechtriem, Peter Commentary on the UN Convention on the International
Sale of Goods
Second edition (in translation)
Clarendon Press, Oxford, 1998
[cited as: Schlechtriem-reviser]
Staudinger Kommentar zum Bürgerlichen Gesetzbuch, CISG
Thirteenth edition, 1994
[cited as: Staudinger-reviser]
Thiele, Christian Interest on Damages and Rate of Interest under Art. 78 CISG
In: Vindobona Journal, Volume 2 (1998) Number 1, pp. 3-35
[cited as: Thiele]
van den Berg, Albert Jan The New York Arbitration Convention of 1958
T.M.C. Asser Institute-The Hauge
Kluwer Law and Taxation Publishers, 1981
[cited as: van den Berg]
Weitzmann, Todd Validity and Excuse in the U.N. Sales Convention
16 Journal of Law and Commerce (1997), pp. 265-290
(http://www.cisg.law.pace.edu/cisg/biblio/1weitzm.html)
[cited as: Weitzmann]

Index of cases

Appellationsgericht Tessin no. 12.95.00300 d. 12/2-1996 reported in Unilex.

Bomar Oil NV v. ETAP, Cour de Cassation, 9 November 1993, Yearbook XX p. 660.

COMPROMEX award of 30 November 1998 reported in CISGW3, http://cisgw3.law.pace.edu/cases/981130.htm.

COMPROMEX M/21/95 d. 29/4-1996 reported in Unilex.

Hungarian Chamber of Commerce and Industry Court of Arbitration VB/94124 d. 17/1-1995 reported in Unilex.

ICC Award No. 4131, Dow Chemical France et al. v. ISOVER Saint Gobain, Interim Award of September 23 1982, referred in ICA Yearbook 1984.

ICC Arbitration No. 5721, Clunet 1990.

ICC Award No. 6519, Clunet 1991.

ICC Award No. 8128 of 1995, in Journal de Droit international 1996.

Internationales Schiedsgericht der Bundeskammer der gewerblichen Wirtschaft Wien, arbitral award no. SCH - 4318 d. 15/6-1994 reported in Unilex.

Internationales Schiedsgericht der Bundeskammer der gewerblichen Wirtschaft - Wien (Vienna), Austria, SCH - 4366 reported in Unilex.

Delchi Carrier, SpA v. Rotorex Corp. CLOUT case 85.

ISCID Award AMCO ASIA Corporation et al v. Indonesia, September 25, 1983, 23 International Legal Materials.

ISCID Proceedings in re Holiday Inns/Occidental Petroleum v. Government of Morocco, reported by Lalive, British Yearbook of International Law 1980.

Fung Sang Trading Ltd. v. Kai Sun Sea Products, High Court of Hong Kong, CLOUT abstract 20.

Landgericht Hamburg no. 5 0 543/88 d. 26/9-1990 reported in Unilex.

Oberlandesgericht Düsseldorf; 17 U 82/93. CLOUT case 48.

Oberlandesgericht Düsseldorf 17 U 146/93 reported in CISGW3.

Oberlandesgericht Hamburg 1 U 167/95 reported in Unilex..

Oberlandesgericht Koblenz 2 U 31/96 d. 31/1-1997 reported in Unilex.

Oberlandesgericht Köln, 08.01.1997, 27 U 58/96, reported in Unilex.

Oone Line Ltd. v. Sino-American Trade Advancement Co. Ltd., High Court of Hong Kong, Yearbook XX, p. 284.

Rechtbank van Koophandel, Hasselt AR 1849/94 Vital Berry Marketing NV v. Dira-Frost NV reported in Unilex.

Russian Federation: Moscow City Court, 13 December 1994, CLOUT abstract 147.

Russian Federation: Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry Arbitral award in case No. 155/1994 of 16 March 1995, CLOUT abstract 140.

Skandia and others v. Al Amana, The Supreme Court of Bermuda, CLOUT abstract 127.

Tribunale Civile di Monza 14-01-1993 reported in Unilex.

Zambia Steel v. Clark & Eaton, 2 Lloyd´s Rep. 225.


Index of legal sources

Arbitration rules of the London Court of International Arbitration, 1 January 1998 [abbreviated as: LCIA]

Convention on Agency in the International Sale of Goods, Geneva, 17 February 1983 [abbreviated as: CAISG]

Convention on the Recognition and Enforcement of Foreign Arbitral Awards, New York, 10 June 1958.
[Abbreviated as: NYC]

UNICITRAL Model law on International Commercial Arbitration as adopted by the United Nations Commission on International Trade Law on 21 June 1985, UN Doc. No. A/40/17, Annex I. [Abbreviated as: MAL]

UNIDROIT-Principles of International Commmercial Contracts, Rome 1994. [Abbreviated as: UNIDROIT-principles]

Uniform Law on the International Sale of Goods, Diplomatic Conference, The Hague, 2-22 April 1964. [Abbreviated as: ULIS]

United Nations Convention on Contracts for the International Sale of Goods of 11 April 1980, UN Doc. No. A/Conf. 9 7/18 (Annex 1) 1980. [Abbreviated as: CISG].

Vienna Convention on the Law of Treaties 1969 [abbreviated as: Vienna Convention 1969]


Memorandum

1. The written statement of Mr. Dean should be admitted with full weight.

The applicable rules of procedure are the Arbitration rules of the London Court of International Arbitration (hereinafter LCIA) as agreed in the arbitration agreement.[1] Furthermore, the UNCITRAL Model Law on International Commercial Arbitration (hereinafter MAL) is applicable, since it has been adopted by Danubia. This dispute is an international[2] commercial[3] arbitration and thereby under the scope of MAL pursuant to Art. 1(1).

1.I. The written statement of Mr. Dean is admissible, as it is relevant to the issues in dispute and fulfils the formal requirements for admission in Art. 20.3 LCIA and is required to state the facts necessary to make a fair and impartial award.

1.I.1. Mr. Dean's statement is relevant, as it is directly related to the issues in dispute.

Mr. Dean's statement[4] contains, inter alia, his recollections on what was said in the telephone conversation on 19 February 1998 between Mr. Stern and himself. The dispute originates from the issues referred to in the telephone conversation, such as the question of identity of the purchasing party, whether a contract was concluded, the intentions of the parties, and the content of the contract. Thus, the information in the written statement of Mr. Dean is directly related to the issues in dispute and the statement is therefore relevant in this dispute.[5]

1.I.2. Mr. Dean's statement is admissible under Art. 20.3 LCIA, as it is in writing and signed and, as Mr. Dean can give evidence in the dispute according to Art. 20.7 LCIA.

The Claimant has a right to present testimony in the form of a written statement unless the Tribunal decides otherwise according to Art. 20.3 LCIA, which states that a written and signed statement can be admissible. [6]

Mr. Dean's statement fulfils the formal requirements of Art. 20.3 LCIA, as it is signed by Mr. Dean.

The fact that Mr. Dean was employed by Claimant does not exclude Mr. Dean's statement, as Art. 20.7 LCIA anticipate employees giving witness testimony.

1.I.3. The statement of Mr. Dean is required to state the facts necessary to make a fair and impartial award.

The Tribunal should admit Mr. Dean's statement, as it contains facts on the central issues of the dispute, which are essential to elucidate the case properly and thereby necessary to make the award.[7] Mr. Dean is the only person able to give the Claimant's version of the telephone conversation, as he was acting on behalf of the Claimant.[8] If the statement is excluded, it will deprive the Claimant's opportunity to prove its submissions. Furthermore, admitting the statement of Mr. Dean would bring the parties on equal footing regarding the ability to prove what was said in the telephone conversation on 19 February 1998 and it would not jeopardise the position of the Respondent. Thus, to secure a fair and impartial arbitration[9] the statement of Mr. Dean should be included in order to counterbalance Mr. Stern's statement[10] regarding the telephone conversation.

1.II. The written statement of Mr. Dean should be given full weight as there is no reason to question Mr. Dean's credibility in regard to the statement.

The Tribunal has the power pursuant to Art. 22.1 LCIA to decide whether or not to apply rules on evidence as to weight and the Tribunal can pursuant to Art. 19 MAL determine the weight of any evidence presented to it.[11] This discretion[12] is only fettered by its duty to act fair and impartially.[13]

The reasons for Mr. Dean's dismissal do not raise questions as to the credibility of his written statement.[14] The statement is based on the knowledge of Mr. Dean in relation to events, in which he was actively involved. There are no hear-say elements in Mr. Dean's statement, which might have given rise to considerations as to weight if contradicted by first-hand evidence. Thus, it would be appropriate to give Mr. Dean's statement full weight, as it is credible and as the statement exclusively deals with matters of first-hand knowledge of Mr. Dean.

1.III. The Claimant should not be ordered to produce Mr. Dean at the hearing, as the Claimant is not able to compel Mr. Dean to appear since he is no longer employed by the Claimant and as it can be expected that Mr. Dean will be biased due to the litigation between the Claimant and Mr. Dean.

The Respondent has made a request pursuant to Art. 20.4 LCIA that the Claimant should be ordered to produce Mr. Dean at the hearing.

The Claimant should not be ordered to produce Mr. Dean at the hearing since the Claimant has no means to comply with such an order. The Claimant has no means to instruct Mr. Dean to give meeting at the hearing, as he is no longer employed by the Claimant.[15] Moreover, the litigation between the Claimant and Mr. Dean as a result of Mr. Dean's dismissal makes it unlikely that Mr. Dean would be willing to give meeting at the hearing. Furthermore, the LCIA and the MAL do not impose a duty on a witness to appear at a hearing. Even though it is possible under Art. 27 MAL to require court assistance to take evidence in arbitration proceedings, the courts can not compel anyone to give meeting at an arbitration hearing.

It is reasonable to expect that the litigation between Mr. Dean and the Claimant at the time of the hearing will affect his objectivity as a witness. Mr. Dean will most likely be a hostile witness and his testimony may be tainted. Therefore, time and money spend on presenting him will be disproportionate compared to the outcome hereof. According to Art. 14.1 (ii) LCIA[16] the Tribunal should avoid spending unnecessary time and resources.

Neither is it an invariable right for parties to arbitration under the LCIA to hear witnesses orally since Art. 20.3 LCIA allows written witness testimony instead of personal appearance.

Even if the Tribunal orders the appearance of Mr. Dean, his failure to appear would be with good cause for the reasons stated above.

2. A binding and enforceable arbitration agreement has been concluded between the Claimant and the Respondent.

2.I. A binding arbitration agreement was concluded, as the parties have concluded a contract of sale, which contained an arbitration clause, as the clause was incorporated by reference to the Danubia Feed and Grain Association Standard Conditions of Sale No. 5.

The Claimant and the Respondent have concluded a contract of sale according to rules of CISG, as shown infra section 3. The contract of sale (hereinafter the main contract) was made subject to the Danubia Feed and Grain Association (hereinafter DFGA) Standard Conditions of Sale No. 5[17] by means of incorporation, which was evidenced in the letters of 20 February 1998[18)] and 24 February 1998.[19] The DFGA Standard Conditions of Sale No. 5 contains an arbitration agreement as stated in clause no. 13.[20] Thus, a binding arbitration agreement was concluded between the Claimant and the Respondent, as the arbitration agreement was part of the contract.

2.II. The arbitration agreement has formal validity, as the "in writing" requirement in Art. II (2) of the New York Convention and Art. 7 (2) of the UNCITRAL Model Law has been met.

2.II.1. The "in writing" requirement in Art. II (2) of the New York Convention has been met, as the agreement to arbitrate was contained in an exchange of letters.

In accordance with Art. II (1) of The Convention on the Recognition and Enforcement of Foreign Arbitral Awards, New York Convention (hereinafter NYC)[21] the arbitration agreement shall be in writing. Art. II (2) NYC states that an arbitration agreement is "in writing" when the arbitration agreement is contained in an exchange of letters. There was an exchange of letters between the parties. Mr. Dean's letter of 20 February 1998 and Mr. Stern's letter of 24 February 1998 referred to the DFGA Standard Conditions of Sale No. 5, which contained an arbitration clause. This form of incorporation by reference meets the requirement of being contained in an exchange of letters in accordance with Art. II (2) NYC, as the parties knew the exact content of the clause and both intended to incorporate the clause into the main contract. The parties knew the content of the clause from prior business dealings and therefore a direct stipulation of the arbitration clause was not necessary. [22] The reference to the DFGA Standard Conditions of Sale No. 5 was sufficient, as both parties were aware of this practice of incorporation.

2.II.2. The "in writing" requirement in Art. 7 (2) of the UNCITRAL Model Law has been met, as the contract referred to a document containing the arbitration clause and as the contract was in writing in the meaning of Art. 7 (2) of the UNICTRAL Model Law.

According to Art.7 (2) MAL a reference in a contract to a document containing an arbitration clause constitutes an arbitration agreement "in writing" provided that the contract is in writing and the reference is such as to make the clause part of the contract.

The main contract included a reference to the DFGA Standard Conditions of Sale No. 5, which contained Clause No. 13.[23] Thus, there was a reference in the main contract to a document containing an arbitration clause, as required in Art. 7(2) MAL.[24] Furthermore, as stated supra 2.II.2 it is clear that the parties intended to incorporate the clause.

The main contract was "in writing" in the meaning of Art. 7(2) MAL, as the exchange of letters[25] constituted evidence of this contract, thus giving the contract concluded 19 February 1998 a written form, by being "contained in an exchange of letters" according to Art. 7(2) MAL. [26]

2.II. 3 Alternatively, the "in writing" requirement in the New York Convention and the UNCITRAL Model Law is fulfilled, as it is evidenced that the arbitration clause is contained in a document which formed part of the contract.

If the Tribunal does not find that the "in writing" requirement of NYC and MAL is fulfilled, as shown in section 2.II.1 and 2.II.2 then the Claimant submits that the "in writing" requirement is fulfilled alternatively.

The wording "agreement in writing shall include...." in Art. II NYC and the wording "an arbitration agreement is in writing ..." in Art. 7(2) MAL, implies that the Tribunal must acknowledge the described situations,[27] but does not bar the Tribunal from acknowledging other forms of "agreement in writing", as fulfilling the "in writing" criteria. By not choosing a more explicit formulation of these articles the drafters have opened for other ways of fulfilling the requirements of the Art. II.(2) NYC and Art. 7 (2) MAL. There exists no transnational consensus as to the meaning of these articles,[2] and therefore the Tribunal is free to interpret the requirements as it finds appropriate.

In this specific dispute the Tribunal should find that the arbitration agreement was contained in the main contract, as there is no doubt as to the question of whether the parties intended to incorporate the arbitration agreement. The Tribunal can interpret this form of incorporation as fulfilling the requirements of the NYC and the MAL, as this would not inflict upon the purpose of the " in writing " requirements.

The purpose of the provisions is to ensure legal certainty, as to the fact that the parties have chosen arbitration.[29] In this dispute the purpose has been fulfilled, as there is a written arbitration clause[30] and, as there is sufficient evidence that this clause has been incorporated into the contract.[31] Moreover, there is actual knowledge of the clause. Firstly, as the clause is drafted by the Respondent's own trade association, secondly, the Respondent has chosen to use it as part of its business terms, and finally it has been using these terms in prior business dealings[32]. Furthermore, the Respondent had not objected to be bound by an arbitration agreement but only to whether the Claimant was a party.[33] To affirm the Respondent to arbitration would therefore not deprive the Respondent of legal certainty, as it was the Respondent's intention to arbitrate disputes under this contract from the very beginning.

The Respondent has acted on the main contract - at least to the point of termination - and has thereby shown its intention to act in accordance with the terms of the main contract. It is not acceptable that the Respondent acted in accordance with the other terms of the contract but refuses to be bound by the single term of arbitration.[34]

The procedure of incorporation, which the Claimant and Respondent have used in this situation is the normal procedure in this line of business. By requiring a formalistic procedure, the Tribunal demands the parties to use a method of incorporation that is not normal for the parties, and contrary to commercial reality.[35] Commercial reality demands that the normal course of business to be taken into consideration, when interpreting the formal requirement of "in writing". This corresponds to the Explanatory Note on the Model Law, which express that the rules should be interpreted in the best interest of the users.[36] The issues in dispute are only related to the interest of the parties and an arbitration tribunal is appointed to manage the parties interests, therefore there is no reason to interpret the rules against the parties intentions. The consequence of requiring a formalistic interpretation of the rules would be that the parties are removed from a chosen international arbitration forum to a national court, which the parties have chosen not to use. International arbitration is a familiar and normal procedure for the parties, litigation on the other hand is not.[37] International arbitration gives the parties the opportunity to customise the rules as to the conduct of the proceedings, an opportunity the parties might not be granted in the Courts. Therefore, a dispute resolved by the Courts could displace the agreed balance between the parties created by the arbitration agreement.

The broad wording of the arbitration clause[38] underlines that the intention of the Respondent was to solve any dispute arising from this contractual relationship by arbitration, and leaving no scope for litigation. The Zambia Steel Precedent[39] supports the consideration of commercial reality in favor of an interpretation with regards to the parties course of business. The Precedent states that the requirement of "agreement in writing" in Art. II (2) NYC includes an unsigned arbitration clause in writing, when it is evidenced that the main contract incorporates this clause. In the dispute at hand the parties incorporated a written arbitration clause by reference to the DFGA Standard Conditions of Sale No. 5. The letters of 20 and 24 February 1998 provided evidence[40] that the clause was part of the main contract. As such, this arbitration agreement should in accordance with the Zambia Steel Precedent be held to fulfil the "in writing" requirements of the NYC and MAL.[41]

Finally, there is no reason for requiring a higher degree of proof for establishing the arbitration agreement in the contract than the contract itself, when it is clear - as in this case - that the parties entered into a contract.[42]

2.III. In the alternative, the parties have entered into an arbitration agreement regardless of whether there is a contract of sale between the Claimant and the Respondent by virtue of the Dow Chemical doctrine.

If the Tribunal does not find that an arbitration agreement was entered into between the Claimant and the Respondent the Tribunal should find that an arbitration agreement between the Respondent and Food Imports could be extended to the Claimant.

2.III.1. Whether the arbitration agreement should be extended to include the Claimant shall be determined according to international commercial rules of law, as the agreement to arbitrate is independent of the contract of sale and as case law has applied these rules of law and as this is an international commercial dispute.

According to Art. 23.1 LCIA and 16(1) MAL the validity of the arbitration agreement shall be determined independently from the determination of the validity of the main contract.[43] The CISG, which applies to the merits of the dispute, is not applicable, as this is a question of whether an existing arbitration agreement should be extended to include the Claimant. Since the parties have not made a choice-of-law regarding this matter, the Tribunal has the discretion to choose the applicable rules pursuant to Art. 22.3 LCIA.[44]

The applicable rules of law should be international rules of law derived from case law due to the international character of the relationship between the parties. The parties are situated in two different countries and have chosen the CISG to govern the substantive issue of the contract and LCIA as procedural rules of the arbitration. This underlines the international character of the relationship.

2.III.2. According to the Dow Chemical doctrine the arbitration agreement can be extended to include the Claimant, as the Claimant and Food Imports formed a corporate group and the Claimant was the active and effective participant of the contract, which contained the arbitration clause.

The Dow Chemical doctrine states that the parent company is a party to the arbitration agreement formally entered into by one of its entities with a third party, if the parent company is an active participant in the contractual relationship. The Respondent alleges that Food Imports and not the Claimant is a party to the arbitration agreement and therefore the relevant international rule is the Dow Chemical doctrine,[45] which is substantiated in case law.[46]

The Claimant and Food Imports formed a corporate group at the time of conclusion of the arbitration agreement,[47] as the Claimant owned 51 % of the stock in Food Imports.[48] It is acknowledged that a stock holding of a minimum of 50 % of another company constitutes a parent-subsidiary relationship and thereby a corporate group.[49] The sale of the stock holding does not affect the application of the Dow Chemical doctrine, as the decisive state of the companies relationship is the time of conclusion of the arbitration agreement.

The Claimant had an active role in the conclusion of the contract[50] containing the arbitral clause, as the contract was entered into on the initiative of the Claimant.[51] It was also the Claimant that undertook the obligations of the purchasing party by opening the letter of credit.[52] Furthermore, when the Respondent wanted to change the terms of the contract it contacted the Claimant and not Food Imports.[53] Therefore the Claimant was an active participant to the contract until the unjustified avoidance by the Respondent.[54]

Thus the Claimant, as a parent company, was an active participant to the contract and was principally affected by the disputes arising hereof and therefore the arbitration clause should be extended to the Claimant's claims against the Respondent[55] in accordance with the doctrine of Dow Chemical.

2.IV. If the Respondent should object to the Tribunals jurisdiction, the Claimant submits that the Tribunal has competence to rule on its jurisdiction in accordance with Art. 23.1 LCIA and Art. 16(1) MAL

The Tribunal has competence to rule on its own jurisdiction[56] in this dispute according to the doctrine of kompetenz-kompetenz,[57] as contained in both Art. 23.1 LCIA[58] and Art. 16 (1) MAL.[59] The Respondent's objection that the Claimant is not party to the arbitration agreement[60] does not intervene with the Tribunal's jurisdiction, as the Tribunal has jurisdiction regardless of the nature of the objections.[61] In accordance with the doctrine of severability,[62] as stated in Art. 23.1 LCIA[63] and Art. 16 (1) MAL[64] the Respondent's objection that the main contract is not entered into with the Claimant[65] does not inflict upon the validity of the arbitration agreement and therefore does not deprive the Tribunal its jurisdiction.

Furthermore, the Tribunal has jurisdiction to rule on the substantive dispute, as the dispute falls within the scope of the arbitration agreement.

3. There has been concluded a contract of sale between the Claimant and the Respondent.

The CISG applies as the governing substantive law of the dispute by virtue of Art 1(1)(a) CISG, as the Claimant and the Respondent have their place of business in different Contracting States[66] and furthermore the parties agreed that the CISG should be the governing substantive law of the contract.[67]

3.I. The contract was concluded orally during the telephone conversation on 19 February 1998, as the Respondent's representative Mr. Stern's statement as to price and method of delivery constituted an offer and the Claimant's representative Mr. Dean's statement constituted an effective acceptance.

The Claimant submits that there has been concluded an oral contract of sale on 19 February 1998 in accordance with Art. 23 CISG, which states that a contract is concluded at the moment when an acceptance of an offer becomes effective in accordance with the provisions of the CISG. As stated in Art. 11 CISG, the CISG contains no requirements that a contract of sale should be in writing and therefore it is acceptable under the CISG that the contract was concluded orally during the telephone conversation on 19 February 1998.[68]

3.I.1 The quotation was sufficiently definite to constitute an offer pursuant to Art. 14(1) CISG, as the goods, the quantity and the price were determined and it indicated the Respondent's intention to be bound in case of acceptance, as this would be the understanding of a reasonable person in the given circumstances.

The legal requirements for constituting an offer in accordance with Art. 14(1) CISG are that the proposal for concluding a contract has to be addressed to one or more specific persons, that it is sufficiently definite and that it indicates the intention of the offeror to bound in case of acceptance.[69]

The Claimant's inquiry determined the goods to be standard feed wheat and contained specifications as to quantity and time of delivery.[70] The Respondent gave in the light of these specifications a quotation of "$60.00 per ton FOB Danubian port".[71] Thus, the goods, quantity and price were determined in the quotation and therefore, the legal requirements as to definiteness in Art 14(1) CISG were fulfilled. In the meaning of Art. 14(1) CISG the indication of an intention to be bound in case of acceptance depends upon the understanding that a reasonable person as the recipient[72] of the proposal would have had.[73] As the specifications of the goods, quantity and price were clearly determined and Mr. Stern stated the quotation without any reservation not to be bound in accordance with the quotation, it objectively seen indicated an intention to be bound in case of acceptance. Furthermore, it was common practice[74] between Mr. Dean and Mr. Stern to conclude contracts on the telephone[75] and thus, it was reasonable to believe that the Respondent intended to be bound by the quotation given by Mr. Stern in case of acceptance. The offer was sufficiently definite and showed the Respondent's intention to be bound in case of acceptance and thereby constituted it an offer.

3.I.2. The Claimant's statement was an acceptance of the offer, since it indicated assent in accordance with Art. 18(1) CISG, as the Claimant accepted the price quoted by the Respondent and the acceptance was effective, since the indication of assent reached the Respondent in accordance with Art 18(2) CISG.

According to Art. 18(1) CISG an acceptance is a statement made by the offeree indicating assent to an offer. In the telephone conversation on 19 February 1998 the Claimant made a statement indicating its assent to the offer. This shows from the Defendant's Exhibit No. 1, which states "When I told him that we were currently asking $60.00 per ton FOB Danubian port, he said that they would take it".

In accordance with Art. 18(2) CISG an acceptance becomes effective, when the indication of assent reaches the offeror and furthermore, Art. 18(2) CISG states that an oral offer must be accepted immediately unless the circumstances indicate otherwise. The acceptance of the Respondent's offer was given immediately in the telephone conversation and must therefore be considered as having reached the Respondent pursuant to Art. 24 CISG, which states that an oral statement reaches the addressee the moment it is made to him. Thus, the acceptance given by the Claimant was effective.

3.II. The contract concluded on 19 February 1998 was entered into between the Claimant and the Respondent, as it was the intention of the parties that the Claimant and not Food Imports should be a party.

Mr. Dean was in fact a salaried employee at the Claimant and therefore, the question of the identity of the parties is to be looked upon as a question of Mr. Dean acting as an agent. The CISG does not govern questions of agency.[76] Therefore, domestic law applies and since both Danubia and Mediterraneo are parties to the Convention on Agency in the International Sale of Goods (hereinafter CAISG),[77] the CAISG should apply. Even though the CAISG has not entered into force[78] it is reasonable to apply the principles of the CAISG.[79] Art. 12 CAISG states that the decisive test is whether or not the third party knew or ought to have known that the agent was acting as an agent, in which case the acts of the agent shall directly bind the principal and third party to each other. The CAISG does not specify how to establish the intentions of the parties, why the CISG should be applied to this question.[80] The intentions of the parties are to be established by interpretation in accordance with Art. 8(2) CISG, which calls for the application of an objective[81] test when interpreting the statements or conduct of the parties. [82] Pursuant to Art. 8(3) CISG the interpretation is to be made with due consideration to all relevant circumstances of the case including the negotiations, practices established between the parties, usages and any subsequent conduct of the parties.

If the contract was concluded with the awareness of the identity of the contracting parties, the Respondent and the Claimant are bound by the contract. As the Respondent purports that it did not have a contract with the Claimant it is of importance whether the Respondent knew or ought to have known on 19 February 1998 that the Claimant was to be the purchasing party, as this awareness would bind the Respondent to the contract with the Claimant.[83]

3.II.1. The Respondent knew or ought to have known that the Claimant was the purchasing party, as this was evident from Mr. Dean's statements during the telephone conversation and the subsequent conduct of the parties.

The Respondent knew or ought to have known at the time of the telephone conversation that the Claimant was the purchasing party. This can be shown both from the information given by Mr. Dean in the telephone and from the subsequent conduct of the parties.

3.II.1.a. As Mr. Dean informed the Respondent on 19 February 1998 that he was now working for the Claimant the Respondent knew or ought to have known that the Claimant was the purchasing party.

Mr. Dean was a salaried employee at the Claimant at the time of the telephone conversation[84] and he informed Mr. Stern of his new position as the person responsible for purchasing standard feed wheat for the Claimant.[85] Mr. Stern thus knew or ought to have known that Mr. Dean's new employment at the Claimant meant that he was now making purchase contracts on behalf of the Claimant.[86] By applying the objective test in Art. 8(2) CISG it would be the understanding of a reasonable person of the same kind as Mr. Stern that Mr. Dean was acting on behalf of his new employer and thus, in accordance with Art. 12 CAISG, the Claimant and the Respondent should be directly bound by the contract. Furthermore, this is supported by the fact that Mr. Dean had always made purchases on behalf of his employer at the given time[87] and Mr. Stern was aware of this, as Mr. Dean and Mr. Stern had been in contact a number of times.

3.II.1.b. The subsequent conduct of the parties evidences that the Respondent, on 19 February 1998, knew or ought to have known that the Claimant was the purchasing party.

3.II.1.b.1. The confirmation letter of 20 February 1998 was on the stationery of the Claimant.

The confirmation letter was on the stationery of the Claimant.[88] This shows that the Claimant intended to be the purchasing party and the Respondent must have been aware of that. The Respondent states in its Statement of Defense, that the confirmation indicated that the Claimant was the purchasing party; "It noted, however, that the letter was written on stationery of Processing, which would normally indicate that Processing was the purchasing party".[89] Thus, the Respondent was actually aware that the Claimant was the purchasing party. Moreover, it is supported by the fact that the Claimant and Food Imports were two separate entities[90] and thus would not send letters on behalf of each other[91]. The Respondent could not be unaware that the Claimant and Food Imports were to seperate entities due to its prior dealings with Food Imports. Therefore, the Respondent could not have assumed - against what would be the assumption of a reasonable person - that the contract was entered into with Food Imports, as the Claimant was the purchasing party.

3.II.1.b.2. The Respondent sent its original correspondence regarding the contract to the Claimant from 5 May 1998.

The Respondent addressed its letters in original regarding the contract to the Claimant from 5 May 1998. If the Respondent considered Food Imports to be the contracting party, it would have been natural for the Respondent to continue to address the letters in original to Food Imports. This was normal procedure between the Respondent and Food Imports.[92] As the letters regarded a possible non-performance of the Respondent's contractual obligations they should have been sent to the purchasing party. The Respondent states in its Statement of Defense that the Claimant was the ultimate buyer of the wheat and therefore the Claimant would be the party most directly affected by the export prohibition.[93] The problem of the export prohibition and its consequences for the contractual relationship between the Claimant and Food Imports would be a problem to be settled between these contracting parties. The Respondent could not interfere in a contractual relationship, which it was not a part of and therefore, there was no need for the Respondent to correspond directly with the Claimant, unless the Respondent believed that the Claimant was the purchasing party.[94]

3.II.1.b.3. The letters from the Claimant stated that there was a contract between the Respondent and the Claimant.

All the correspondence regarding the contract, which the Respondent received from the Claimant, stated that there was a contract between the Claimant and the Respondent. In the Claimant's letter of 21 May 1998 it is stated "We expect Grain Dealers, PLC to fulfill its contractual obligations to us".[95] From this correspondence it is shown that the Claimant believed it had a contract with the Respondent. Therefore, the Respondent knew or ought to have known that the Claimant was the purchasing party.

Furthermore, this is supported by the fact that the Respondent received no reaction from Food Imports to its letter of 24 February 1998.[96] The Respondent should then have been aware that Food Imports did not intend to enter into a contract with the Respondent, since no acknowledgement of a contract was ever given from Food Imports.[97]

3.II.I.b.4. The Respondent's request of 21 May 1998 to the Claimant for a modification of the contract was a request that only contracting parties could comply with in accordance with Art. 29 CISG.

On 21 May 1998 the Respondent asked the Claimant for a modification of the contract so as to allow partial shipments and an extension of the letter of credit.[98] Thus, the Respondent entered into negotiations[99] regarding a subject, which only the contracting parties could agree upon according to Art. 29(1) CISG.[100] According to the Respondent's own statements in its Statement of Defense[101] it was aware that it was negotiating with the Claimant. This conduct must be interpreted as a reflection of the Respondent's awareness that the Claimant was the contracting party, since it was the Claimant, who opened the letter of credit.

3.II.1.b.5. The Respondent continued negotiations with the Claimant regarding modification of the letter of credit upon the receipt of the letter of credit issued for the account of the Claimant.

The contract called for the payment of the contractual price to be by letter of credit opened by the buyer.[102] In the transactions between the Respondent and Food Imports the contractual price was always paid by Food Imports by letter of credit.[103] Even when Food Imports resold the wheat directly to the Claimant and the Respondent had been aware of this, the letter of credit was opened by Food Imports. The letter of credit in this contract was opened for the account of the Claimant and therefore the Claimant was the purchasing party.[104] The term buyer in the DFGA Standard Conditions of Sale No. 5 must be understood to mean the purchasing party, i.e. the Claimant.

The Respondent in the letter of 29 May 1998[105] insisted that the letter of credit should be amended and it made its request to the Claimant.[106] This shows that the Respondent regarded the Claimant as being the buyer and a party to the contract. Furthermore, the fact that the Respondent continued to insist on an amendment of the letter of credit showed that it had always considered the Claimant as the purchasing party.

3.III. Alternatively, a contract was concluded on 20 February 1998, as the Claimant's letter of confirmation had binding contractual effect, as there had been negotiations with a content that led the Claimant to believe that a contract was concluded and, as the Respondent failed to object clearly in accordance with the principle of good faith.

3.III.1 The Claimant's letter of 20 February 1998 has binding contractual effect unless clearly objected to due to the negotiations prior to the conclusion of the contract.

If the Tribunal should find that no oral contract was concluded on 19 February 1998 then the telephone conversation should be considered as negotiations prior to the conclusion of the contract. Therefore, the logical assumption is that there were negotiations regarding a possible contract between the Claimant and the Respondent. The letter of confirmation sent by the Claimant on 20 February 1998 showed that the Claimant believed that a contract had already been concluded. The letter stated:"..6.000 tons of standard feed wheat were purchased from you at $60.00 per ton FOB".[107] This was an express reference to what the Claimant believed to be a contract, and the letter would in accordance with Art. 8(2) normally be regarded as a confirmation of an already concluded contract.[108]

In such circumstances, legal scholars advocate that a commercial letter of confirmation can have binding effect. [109] This is also in accordance with the CISG, which rests on a general principle of reasonableness and good faith.[110] From the confirmation letter the Respondent knew or ought to have known that the Claimant believed that a contract had been concluded. The Respondent should thus in conformity with the principle of good faith in international trade[111] clearly have objected if it could not accept to have a contract with the Claimant,[112] as it was reasonable for the Claimant to believe that a contract was concluded.

3.III.2. The Respondent failed to object to the Claimant's letter of 20 February 1998, as the letter of 24 February 1998 did not clearly state that the Claimant was not party to the contract.

In accordance with Art 8(3) CISG the statement made by the Respondent on 24 February 1998 should be interpreted with due consideration given to the subsequent conduct of the Respondent.[113] The subsequent conduct of the Respondent, as shown supra in 3.II.1.b., indicated that the Respondent considered a contract to exist with the Claimant as the purchasing party. Therefore, there is a conflict between the subsequent conduct of the Respondent and its statement in the letter of 24 February 1998.[114] When such a conflict arises between the Respondent's declaration and its subsequent conduct it is the actual conduct of the Respondent, which determines the meaning of the declaration.[115] An interpretation on basis of Art 8(2) CISG leads to the conclusion that a reasonable understanding of the Respondent's statement in the light of its actual conduct would be that the Respondent believed that a contract existed between the Claimant and the Respondent. Hence, the Respondent failed to object clearly to the Claimant's letter of confirmation, as the statement in the letter of 24 February 1998 is contradictory to the Respondent's subsequent conduct and therefore a binding contract was concluded on 20 February 1998 between the Claimant and the Respondent.

3.IV. In the second alternative, the contract was concluded on 29 May 1998 at the latest, as the Claimant on that date by opening the letter of credit acted in reliance that a contract was concluded.

Art. 23 CISG suggest that even if it is impossible to isolate the specific moment when an offer and acceptance were made a contract can exist.[116] Thereby meaning that when viewing the contractual relationship as a whole and a contract exist according to the parties intentions and conduct, then the provisions of the CISG is fulfilled.[117]

As set out supra section 3.II.1.b., the Respondent continued to proceed with the contract, as if the Claimant were the purchasing party.

In accordance with Art. 8(2) CISG the reasonable understanding of the Respondent's conduct throughout the implementation of the contract is that the Respondent considered the Claimant as the purchasing party to the contract. Consequently, the Respondent can not later rely on its statement in the letter of 24 February 1998 that the Respondent did not conclude a contract with the Claimant, since the Claimant acted in reasonable reliance[118] that a contract was concluded between the Claimant and the Respondent ultimately manifesting in the Claimant opening the letter of credit on 29 May 1998.[119]

The Respondent was aware of the Claimant's intentions to open the letter of credit, since the Respondent was notified hereof in the Claimant's letter of 21 May 1998. The Respondent took no actions to notify the Claimant that no contract existed, which would have been the proper thing to do when observing good faith in international trade.[120]

The Respondent was aware that the Claimant would act in reliance that a contract was concluded. Therefore, as the Respondent did not object, the Respondent was bound by the contract with the Claimant, as the Claimant acted in reliance by opening the letter of credit on 29 May 1998 and thus, on this date a contract was concluded.[121] Furthermore, the Respondent's subsequent conduct showed acceptance of a contract with the Claimant and therefore the Respondent should be estopped from denying the existence of the contract.[122]

4. The Respondent was in Breach of the Contract.

4.I. The Respondent was in breach of the contract pursuant to Art. 30 CISG by failing to deliver the wheat at the agreed time of delivery and by failing to deliver the agreed amount of standard feed wheat.

4.I.1. The Respondent's failure to make delivery on July 1998 was a breach of the contract pursuant to Art. 33(b) CISG.

The wheat could have been delivered on any date within the month of July pursuant to Art. 33(b) CISG, as there was no fixed date of delivery. The Respondent failed to deliver and was thus, in breach of its obligation under the contract.

On the other hand, the Respondent wanted the contract modified with regard to the time of delivery of the wheat, as it wanted to split the delivery over several months.[123] However, the contract stated that delivery was fixed for July and that partial delivery was not allowed.[124] The Respondent had no right to unilaterally change the time of delivery, since any modification to a contract requires as a minimum that the parties are in agreement pursuant to Art. 29 CISG. The Claimant had not agreed to any modification proposed by the Respondent,[125] therefore the contract's terms remained unchanged. Consequently, the Respondent could only be released from its obligation by performing according to the contract, as Art. 33(b) CISG underlines the supremacy of the contract made between the parties. In fact, the delivery was never made, as the Respondent decided on 16 June 1998 to re-allocate the wheat to its other customers[126] and thus breached the contract by failing to deliver the wheat at the stated time.

4.I.2 The Respondent's failure to deliver 6,000 tons of wheat was a breach of the contract pursuant to Art. 35 CISG.

The Respondent was not willing to deliver 6,000 tons of wheat in one shipment, although the contract stated that the Respondent was to deliver 6,000 tons of wheat and that partial delivery was not accepted. The Respondent wanted to deliver 80% of the contracted quantity of wheat.[127] However, the Claimant never agreed to accept delivery of 4,800 tons of wheat in July instead of 6,000 tons in July. The Respondent remained bound by the original agreement to deliver 6,000 tons, since the Claimant and the Respondent had not reached an agreement to modify the amount of wheat for delivery.[128]

The delivery of 4,800 tons wheat would have been regarded as non-confirming goods pursuant to Art. 35 CISG and in fact, the Respondent did not deliver any wheat. Therefore, the refusal by the Respondent to deliver the full 6,000 tons and the subsequent failure to deliver any wheat was a breach of the contract.[129]

4.II. The Respondent's refusal to deliver constituted an unjustifiable avoidance of the contract, as the Claimant was not in anticipatory breach of the contract and, as the Claimant had not committed a fundamental breach of the contract.

4.II.1. The Respondent could not avoid the contract on 16 June 1998 pursuant to Art. 72(1) CISG, as there was no anticipatory breach of contract by the Claimant.

According to Art. 72(1) CISG, the Respondent could have avoided the contract prior to the date of performance, if it had been clear that the Claimant would commit a fundamental breach of the contract prior to the date of the delivery, i.e. July 1998. However, the Claimant had already performed its main obligation under the contract, which was the obligation to pay the purchase price, by issuing the letter of credit. Furthermore, the Claimant had not indicated any unwillingness to perform the other obligations that arose from the contract, i.e. the obligation to take delivery. Therefore, there was no anticipatory breach of the contract.

The Respondent's notification of its avoidance of the contract is of no relevance, as the Claimant was not in anticipatory breach and the Respondent could not avoid the contract.

4.II.2. The Respondent could not avoid the contract on 16 June 1998 pursuant to Art. 64 CISG, as the Claimant's refusal to take partial delivery was not a fundamental breach pursuant to Art. 25 CISG.

The Claimant had not committed a breach, much less a fundamental breach, of the contract as defined in Art. 25 CISG,[130] since the Claimant had fulfilled its part of the contract by issuing the letter of credit as required by the contract at the required time.[131] The Claimant's refusal to accept partial delivery and refusal to change the letter of credit did not amount to a breach of the contract because firstly, the contract had not been modified as to the terms of delivery of the wheat and secondly, the Claimant's obligations were solely based on the contract as CISG gives supremacy to the contract. The Claimant was acting in good faith throughout the contract. However, the Respondent's refusal to deliver the goods as required by the contract, and more importantly the Respondent's stated intention to re-allocate the wheat to other customers, was a repudiation of the contract. Therefore the Respondent could not justify its avoidance of the contract and the Respondent breached its obligation as the seller to perform in accordance with the contract pursuant to Art. 30 CISG.

5. The Claimant is entitled to $90.000 in damages and interest hereof.

5.I. The Claimant is entitled to damages for its replacement purchase pursuant to Art. 75 CISG, as the Claimant had avoided the contract by making the replacement purchase and this purchase was made in a reasonable manner and within reasonable time after avoidance.

Art. 45(1)(b) CISG gives the Claimant the right to damages for loss suffered as a result of the Respondent's breach of the contract. Therefore the Claimant is entitled to damages for the additional costs of making the replacement purchase, which amounts to $90.000.

5.I.1. The Claimant avoided the contract pursuant to Art. 72(1) CISG, by making a replacement purchase as the Respondent's declaration made it clear that the Respondent would commit a breach and this breach was fundamental pursuant to Art. 25 CISG.

5.I.1.a. The declaration was an anticipatory breach.

The Respondent in its letter of 21 May 1998 declared its unwillingness to deliver 6,000 tons of standard feed wheat as agreed in the contract.[132] Furthermore, the Respondent stated in its letter of 3 June 1998 that it would deliver only 4,800 tons of wheat in July or no wheat at all.[133] It was evident before the time of performance of delivery that the Respondent would not deliver and thus, the Respondent was in anticipatory breach of the contract

5.I.1.b. The breach was fundamental, as it substantially deprived the Claimant of what it was entitled under the contract.

The failure to deliver the contracted amount of wheat was a fundamental breach pursuant to Art. 25 CISG because the Claimant suffered a detriment that substantially deprived it of what it was entitled to under the contract. The Claimant was entitled to 6,000 tons of wheat at $60,00 per ton FOB Danubia in July. The Respondent's failure to perform caused the Claimant to make a replacement purchase for delivery of wheat in July, which was made at a greater cost. Therefore the Respondent actions were sufficient to give the Claimant the right to avoid the contract.

5.I.1.c. The Claimant was not under an obligation to give notice of avoidance under Art. 26 CISG, as it was evident that the Respondent was not going to perform the contract.

The Claimant avoided the contract by making the replacement purchase on 18 June 1998, which excluded performance of the original contract of sale. According to Art. 72(3) CISG, the Claimant did not have to inform[134] the Respondent of avoidance on the Claimant's part as the Respondent made clear its intention to repudiate the contract.[135] In its letter of 16 June 1998[136] the Respondent stated that it would re-allocate the wheat - that would otherwise have been shipped to the Claimant - to other customers. Firstly, the refusal to perform itself was a fundamental breach for the purposes of Art. 72(1) CISG and secondly, it was not possible for the Respondent to avert the avoidance by giving assurances of performance,[137] as it is the Respondent itself that refuses to perform.

Where a party finally and definitely repudiates the contract, such a repudiation creates a situation upon which the other party may rely and act. Therefore the aggrieved party, in this case the Claimant, may take the Respondent at its word and set aside the contract by making the substitute transaction. This also follows from Art. 7(1) CISG, as an exception to the requirement of notice where a party finally and definitely repudiates the contract would be in accordance with the observance of good faith in international trade.[138] In this case there is an exception to the duty to notify, because the avoidance by the Claimant was in any case possible and it was clear before the conclusion of substitute transactions that the Respondent would not perform its obligation.[139]

Therefore the Claimant avoided the contract pursuant to Art. 72(1) CISG and it could do so without notifying the Respondent.

5.I.2. The replacement purchase was made in accordance with Art. 75 CISG, as it was made two days after the repudiation by the Respondent and at the current market price.

The replacement purchase was made within reasonable time, as the Claimant made the purchase two days after the repudiation by the Respondent and thereby avoided the danger of further increase in the world market price for standard feed wheat.[140] The replacement purchase was made two days after Respondent's letter of 16 June 1998, which stated that the Respondent was re-allocating the wheat to other customers. The Claimant bought standard feed wheat for July FOB Equatoriana port, delivery at $75.00 per ton, which was equivalent to the world market price[141] at this time compared to $60,00 per ton at the time of the contract. The Claimant made the replacement purchase in a reasonable manner, as it had bought the wheat at the available price and as the market price for wheat in July had risen before the Respondent's repudiation of the contract. The actions of the Claimant reflected that it acted in good faith as it neither delayed the replacement purchase nor did it buy the wheat at a price above the world market price.[142]

Therefore, the requirements of Art. 75 CISG are fulfilled and the Claimant is entitled to recover damages amounting to its loss of $90,000, which is the difference between the contracted price of wheat and the market price at the time of the replacement purchase.

5.II. In the alternative, damages can be claimed under Art. 74 CISG, as the Claimant suffered a loss as a result of the Respondent's breach of the contract.

If the Tribunal finds that the avoidance of the contract by the Claimant was not effective and thereby not allowing the Claimant damages under Art. 75 CISG, then the Claimant is entitled to full compensation pursuant to Art. 74 CISG of the loss it suffered as a result of the Respondent's breach.[143] The price difference suffered as a consequence of making the replacement purchase is a direct loss clearly foreseeable by the Respondent. The Respondent could have foreseen that the Claimant would make a replacement purchase to cover the non-delivery,[144] as it was a term of the contract that the wheat had to be delivered in July. When the Respondent repudiated the contract on 16 June 1998, the Claimant had to buy the necessary amount of wheat from a different supplier, which was made on 18 June 1998 at $75.00 per ton.

At the time of the conclusion of the contract it was foreseeable for the Respondent that a failure of delivery would lead to a replacement purchase and that the purchase price would be the market price at that time, which might be higher at that time. It is clearly foreseeable that the world market price fluctuates as result of shifting supply and demand.[145]

Therefore the Claimant is entitled to damages and on the damages under Art. 74 CISG.

5.III. The Claimant is entitled to interest on the $90,000 in damages, as this would fully compensate the Claimant's loss and interest should be calculated from the time the replacement purchase was made.

5.III.1. The Respondent is liable to pay interest on damages according to Art. 78 CISG, as the Claimant could not dispose over the $90,000 from 18 June 1998 and could thus not earn an interest on the amount from this time.

It is submitted, that although Art. 78 CISG does not expressly mention interest on damages, the wording „any other sum" includes damages.[146] This follows from the principle of full compensation, which is one of the general principles of the CISG.[147] Accordingly, interest is compensation for loss incurred by the aggrieved party as a result of not being able to dispose over a sum owed by the defaulting party.[148] Furthermore, the $90,000 was the specific loss suffered by the Claimant in making the replacement purchase on 18 June 1998 as a result of the Respondent's breach of the contract, making the damage a liquidated sum. Legal scholars agree that one has a right to interest on damage claims under Art. 78 CISG, if the amount in question has been liquidated vis-à-vis the other party.[149]

Therefore, the Claimant is entitled to the interest on $90,000, as the Claimant has to be compensated for the interest it lost by not being able to invest the money owed to it.

5.III.2. The interest is to be calculated from 18 June 1998, as the Claimant's loss occurred on this date.

The Claimant request that the Tribunal order interest to accrue from 18 June 1998, as this would be appropriate.[150]

Interest should begin to accrue before the award is given and from the date of the replacement purchase, as this would fully compensate the Claimant's loss. The Delchi decision[151] stated that the plaintiff was entitled to prejudgement interest pursuant to Art. 78 CISG.

The question of when interest begins to accrue, is not directly dealt with in Art. 78 CISG.[152] This gap should be covered by the UNIDROIT principles,[153] as firstly, they have been used to supplement the CISG in questions regarding interest[154] and secondly, the UNIDROIT principles reflect the CISG principle of full compensation.[155] It has been suggested[156] that the provisions of the UNIDROIT principles might be used to interpret and supplement an internationally binding Convention, even if pre-existing, when they reflect a general principle also underlying the international Convention itself. The principle of full compensation is reflected in the UNIDROIT principles Art. 7.4.10 which states that interest shall accrue from the time of non-performance by the defaulting party. In this case the repudiation represents the non-performance. Subsequently, the Claimant can only be placed in as good a position as if the contract was performed[157] if interest begins to accrue from the time the Claimant could not dispose over the $90,000. It is therefore reasonable to adjudge prejudgment interest from 18 June 1998,[158] as the Claimant had to spend the additional $90.000 on the day of the replacement purchase.

The alternative approach is to see the question of when interest begins to accrue as a question of interpretation of Art. 78 CISG.[159] It has been suggested that the purpose[160] of Art. 78 CISG is best served when interest on damages can be recovered from the time the breach of the contract occurs. The conclusion is that damages become due at the moment the contract is breached and the initial loss occurs. Therefore the Claimant is entitled to interest accruing from the date of the replacement purchase.

If the Tribunal does not find it appropriate that interest should accrue from 18 June 1998 then interest should accrue from the beginning of the Arbitration proceedings, as the Claimant from this date has taken the appropriate steps to secure repayment of the $90,000. In any event interest should accrue from the date of the award given.

5.IV. The Claimant mitigated its loss, as it bought the replacement wheat immediately and at the current market price, and there was no duty to accept partial delivery.

5.IV.1. Claimant's replacement purchase was a reasonable measure in the circumstances pursuant to Art. 77 CISG, as the replacement purchase was made two days after the repudiation and at the current market price.

The Claimant made the replacement purchase as soon as it was possible, without breaching its contractual obligations towards the Respondent. Firstly, the Claimant was not aware that the Respondent would repudiate the contract before 16 June 1998, as it was still possible for the Respondent to deliver 6,000 tons of wheat in July.[161] Secondly, the purchase was made on 18 June 1998, which was immediately after the Claimant became aware of the Respondent's repudiation, thereby limiting the risk that market prices might increase further than $75,00 per ton.[162] And finally, the Claimant bought the replacement wheat at $75,00 per ton, which was the market price for wheat to be delivered in July.[163] This was the price of standard feed wheat since 21 May 1998.[164] Therefore Claimant prevented loss profits and thereby further damages.

Consequently, the replacement purchase was reasonable in the circumstances to mitigate its loss.

5.IV.2. The Claimant was not under a duty to accept partial delivery, as it would have resulted in unreasonable inconvenience for the Claimant

The Claimant produces feeding supplies and it can be expected that the Claimant needed exactly 6,000 tons of wheat for its production in July. This is indicated from the fact that it was an express condition of the contract to deliver 6,000 tons of wheat and that no partial delivery was allowed. It was possible for the Respondent to deliver the full 6,000 tons,[165] as the Respondent was not bound to allocate the wheat to the regular customers.[166] The Respondent could have chosen another more suitable method of allocating the wheat between its customers in order to fulfil its contractual obligations. It would be unreasonable to expect the Claimant to settle for less than the contracted sum when the Respondent was under an obligation to deliver generic goods, which were available on the world market at an acceptable price. Furthermore, the shipment of 6,000 tons from Danubia to Mediterraneo would have cost $144,000, while partial delivery would have produced costs of $172,600.[167] To prevent additional costs of $28,600 the Claimant insisted on no partial delivery as stated in the contract. The Claimant was not obliged to accept partial delivery with an uncertain delivery of 1,200 tons by the end of October, as the Claimant needed the wheat in July and not either in September or October[168] and as partial delivery would have resulted in extra costs for the Claimant.

Moreover, the Claimant's obligation to act in good faith[169] did not give the Respondent a carte blanche to force the Claimant to accept any change to the contract against the Claimant's wishes, as the contract had expressly stated that partial delivery was not acceptable. If the Claimant was forced to accept the partial delivery under a duty to mitigate, it would be a way of letting the Respondent unilaterally change the terms of the contract, and Art. 29 CISG would be undermined. Art. 29 CISG emphasizes the supremacy of the agreement between the parties to a contract.

Therefore the Claimant mitigated its loss pursuant to Art. 77 CISG, as the Claimant was not obliged to accept partial delivery. Consequently the Claimant is entitled to get the full sum of $90,000 in damages. In any event the Respondent must have sold this allocation at a profit, as the market price had risen. Thus, the Respondent suffered no loss by the Claimant's refusal to take partial delivery.

5.V. The Respondent can not be exempted from liability pursuant to Art. 79 CISG, as there was no impediment and any alleged impediment was not beyond the Respondent's control and the Respondent could have foreseen it or avoided its consequences.

5.V.1. The Respondent is liable for the breach, as the floods, the Danubian government's export prohibition and system of export permits, and the fluctuations in the world market price for standard feed wheat were not barriers to performance amounting to an impediment.

Impediments imply a barrier for performance by the defaulting party.[170] Art. 79 CISG requires impediments to be more than mere hardship.[171] Firstly, flooding is considered a natural catastrophe that can amount to a barrier to performance. However, the floods in Danubia had not destroyed the supply of wheat to such an extent that it was impossible for the Respondent to fulfil his contractual obligations. There was sufficient wheat on the Danubian market to make allocation of wheat for export possible[172] and there was wheat available on the world market. Therefore, the floods in Danubia did not constitute a barrier to performance.

Secondly, the government's prohibition did not amount to a barrier to performance because it was not in force at the time for performance of the contract by the Respondent.[173] The prohibition was only a barrier so long as it was in force. However, the prohibition was replaced by a system of export permits, which did not hinder performance by the Respondent. There was no barrier to performance, as the allocation under the system was based on, "all firm contracts for export entered into prior to 17 April 1998 plus an amount equivalent to the average amount sold to regular customers .."[174] The export prohibition and the system of export permits were not impediments since Respondent received an export quota, which was sufficient to cover the amount it had to deliver based on the firm contracts it had entered into as of 17 April 1998. Therefore the Respondent had access to sufficient wheat to fulfill its obligation towards the Claimant.

Finally, the Respondent was not hindered from performance in any case because it would have been possible for it to buy additional wheat, although there was an increase in world market prices for standard wheat. The change in the world market price can be seen as a barrier to performance, if the price increase was extraordinarily high and resulted in economic impossibility to performance. However, in this case the world market price for standard feed wheat increased by 25 %. It has been decided[175] that an increase of 30 % does not amount to a barrier to performance.

Therefore there was no impediment, as these events did not constitute a barrier to performance of the contract by the Respondent.

5.V.2. Any alleged impediments were not beyond the Respondent's control as the Respondent could decide how to allocate the wheat among its customers.

Although the floods and the prohibition were beyond the Respondent's control, the allocation of the wheat by the Respondent was not beyond its control. There was enough wheat to supply all parties with whom Respondent had entered contracts for delivery of wheat prior to 17 April 1998. The decision as to the method of allocation among its customers was made solely by the Respondent, as there were no conditions attached to the government allocation.[176] Therefore the Respondent had control over whether or not the Claimant was to have the full amount contracted for.

5.V.3. The Respondent could reasonably be expected to take the fluctuations in the world market price of standard wheat into account at the time of the conclusion of the contract, as it was a foreseeable event.

Fluctuations of prices are held as foreseeable events in international trade and result in an economic loss well included in the normal risk of commercial activities.[177] Although the floods, the government prohibition and the subsequent allocation of wheat by the government were hardly foreseeable, changes in market prices can therefore be reasonably foreseen.[178]

5.V.4. The Respondent could have avoided or overcome any alleged impediments or its consequences, as the Respondent could have supplied the wheat either by using the allocation given by the government or by purchasing the additional wheat on the world market.

The Respondent wanted to supply standard feed wheat to regular customers, with whom firm contracts had not been placed by 17 April 1998.[179] All contracts entered into after 17 April 1998 were made subject to availability[180] and therefore the Respondent had no valid excuse not to perform according to the contract. The Respondent should not enter into new contracts at the cost of the Claimant, as this would be contrary to the good faith in international trade.

Moreover, the Respondent as a seller of generic goods bears the risk of performance.[181] The restricted availability of wheat was limited to Danubia as there was wheat available on the world market. The fact that the wheat cost $15,00 more per ton was a risk that the Respondent had to bear, as a seller of generic goods.[182] Therefore, the Respondent could have bought the needed wheat to fulfil all his obligations.

6. The Tribunal is respectfully requested to order the Respondent to pay the costs of the arbitration as well as the legal costs incurred by the Claimant, as the Claimant's case was justified.

According to Art. 28(2) LCIA the Arbitral Tribunal determines the proportions of which the parties should bear all or part of arbitration costs as well as the Tribunal according Art. 28(3) LCIA can order in its award for all or part of the legal costs to be paid by another party. [183] The costs of the arbitration[184] as well as the legal costs should in principle be borne by the unsuccessful party according to Art. 28(4) LCIA.[185] The Tribunal should also take the parties conduct during the Arbitration process into account, when deciding on the costs. [186]

The Claimant had good reason for bringing the case to arbitration, as the Respondent had denied that there was concluded a contract between the Claimant and the Respondent, as it had denied fulfilling its contractual obligations. Therefore, the Claimant was forced to bring the dispute to arbitration in order to enforce its remedies for the non-performance of the contract in accordance with the CISG. Thus, it is the Respondent who has given rise to the dispute and should be considered to be the unsuccessful party. Consequently, the Respondent should bear the costs of the arbitration as well as the legal costs incurred by the Claimant.


Conclusion

In response to the Tribunal's Procedural Order No. 1, and in the view of the above submissions the Claimant respectfully requests the Tribunal to rule and declare as follows:

· that the written statement of Mr. Dean should be admitted with full weight,

· that a binding and enforceable arbitration agreement has been concluded between the Claimant and the Respondent,

· that there has been concluded a contract of sale between the Claimant and the Respondent,

· that the Respondent was in breach of the contract,

· that the Claimant is entitled to $90.000 in damages and interest hereof,

· and that the Respondent should pay the costs of the arbitration as well as the legal costs incurred by the Claimant.


Copenhagen, 1 December 1999

Shian V. Jones-Mortensen, Beatrice J. Joseph, Lone Løschenkohl,
Morten Schwartz Nielsen, Lisbet Vedel Olsen, Simon Andreas Winkler

Counsel for Feed Processing Corp.


FOOTNOTES

1. See Claimant's Exhibit No. 1 and see further infra Section 2.

2. The dispute is international confer Art. 1, section 3 (a) as the Claimant has its place of business in Mediterraneo and the Respondent has its place of business in Danubia. See further Holtzmann/Neuhaus pp. 28 and Berger pp. 50.

3. This dispute is commercial confer notes on Art. 1(1) MAL, as the dispute is arising out of a trade transaction for the supply of goods, see further Holtzmann/Neuhaus pp. 32.

4. See Claimant's Exhibit No. 12.

5. See Mustill/Boyd, p. 306; The Tribunal needs only receive such evidence as is relevant to the issues, which are in dispute.

6. See Mustill/Boyd, p. 306: The right to present evidence is limited by the applicable procedural rules.

7. See Redfern/Hunter p. 327 and Robert p. 224.

8. See infra Section 3.II.1.a.

9. The duty to act fair and impartially is stated in Arts. 14 and 22.1 (f) LCIA and Art. 18 MAL. Further see Mustill/Boyd p. 220 ff. and Reynolds p. 59.

10. Defendant's Exhibit No. 1.

11. See Berger, p. 445 ; The Tribunal is free to weigh the evidence confer Art. 19, section 2, second sentence.

12. See Redfern/Hunter, p. 336; The Tribunal weigh the evidence by discretion.

13. See supra footnote.

14. As stated in Procedural Order No. 2, paragraph 33.

15. See Procedural Order No. 2, paragraph 34.

16. Art. 14.1 (ii) LCIA; " The Tribunal's general duties at all times: ..avoiding unnecessary delay or expense.."

17. See Claimant's Exhibit No. 1.

18. See Claimant's Exhibit No. 2: " The contract is subject to….DFGA Standard Conditions of Sale No. 5"

19. See Defendant's Exhibit No. 2: " The contract is subject to...DFGA Standard Conditions of Sale No. 5"

20. See Claimant's Exhibit No. 1.

21. NYC applies because the dispute involves recognition of an arbitral agreement, Art. I (1) cf. Art. II(1)

22. See Bomar Oil NV v. ETAP, Cour de Cassation, 9 November 1993, Yearbook XX p. 660, found that:" ..an arbitral clause, if not mentioned in the main contract may be validly stipulated by written reference to a document which contains it, for instance general conditions...when the party..was aware of the content of this document..accepted the incorporation of the document in the contract.."

23. See Claimant's Exhibit No. 1, Clause No. 13 specifies arbitration under the LCIA rules.

24. See Skandia and others v. Al Amana, The Supreme Court of Bermuda, CLOUT abstract 127, finds that: "the contractual documents do not need to make an explicit reference to the arbitration clause.."

25. See Claimant's Exhibit No. 2 of 20 February 1998 and Defendant's Exhibit No. 2 of 24 February 1998.

26. See Holtzmann/Neuhaus, p. 264; "The contract containing the reference must be in writing. This probably means that it must meet the requirements contained in the second sentence of the paragraph".

27. Since the MAL is inspired by and follows the NYC as to the "in writing" requirement the two conventions can be interpreted in the same manner, see Explanatory Note by the UNCITRAL Secretariat on the Model Law on International Commercial Arbitration, note 19.

28. See Lookofsky II, p. 583. Even though Lookofsky describes the New York Convention, a similar statement encompasses the UNCITRAL Model Law.

29. See van den Berg, p. 171; "The purpose of this is ensure that a party is aware that he is agreeing to arbitration".

30. The written DFGA Standard Conditions of Sale No. 5 contain the arbitration clause, Claimant's Exhibit No. 1.

31. The letters of respectively 20 and 24 February 1998 mention the DFGA Standard Conditions of Sale No. 5, which contains the arbitration clause, See Claimant's Exhibit No. 2: " The contract is subject to….Standard Conditions of Sale No. 5" and Respondent's Exhibit No. 3: " the contract is subject to...Standard Conditions of Sale No. 5".

32. Procedural Order No. 2, paragraph 13: "..which was used for all sales.."

33. Statement of Defense, paragraph 1.

34. This view is supported by Kaplan, p. 29:"..why if one party is sent a contract which includes an arbitration agreement and that party acts on that contract ..that party should be allowed to wash his hands of the arbitration clause but at the same time maintain an action for the price of the goods delivered.."

35. See Kaplan, p. 30: ".this decision, even if technically correct, produces an absurd result which is inconsistent with commercial reality."

36. As expressed in the Explanatory Note by the UNCITRAL Secretariat on the Model Law on International Commercial Arbitration., note 3: " ..in the best interest of the users.."

37. As expressed by Hermann, p.215: ".. After all, in an international setting the thrust of an arbitration agreement is not the negative idea of excluding court jurisdiction...rather it is the positive idea of creating for an individual case..an international court. As Yves Fortier QC once put it, international arbitration here is not an alternative, it has become, to a great extent, `the only game in town´".

38. See Claimant's Exhibit No. 1, Clause No. 13, which reads: "..Any dispute arising out of or in connection with this contract, including any question regarding its existence, validity, or termination, shall be referred to and finally resolved by arbitration.."

39. See Zambia Steel v. Clark & Eaton, 2 Lloyd´s Rep. 225.

40. See Oone Line Ltd. v. Sino-American Trade Advancement Co. Ltd., High Court of Hong Kong, Yearbook XX, p. 284: "Although not signed .. a number of communications exchanged between the parties provided a sufficient record in writing of their agreement to arbitrate ..".

41. The Zambia Steel case concerns the relationship between the English Arbitration Act 1975 and the NYC, but as stated above in footnote 27 the MAL and the NYC can be interpreted in the same manner.

42. This view is supported by Kaplan, p. 30: "There was no doubt that the parties entered into a contract... Why on earth should the arbitration clause in the contract require to be established with any higher degree of proof than the basis contractual terms themselves.."

43. Usually referred to as the doctrine of severability. The doctrine of severability states the autonomy of the arbitration agreement, which means that if the main contract has come to an end the arbitration agreement does not necessarily also come to an end. A contract which incorporates an arbitration agreement constitutes two separate agreements; the main contract concerning the commercial obligations of the parties and the collateral contract, by which disputes regarding the commercial contract shall be referred to arbitration, see further Redfern & Hunter, p. 174-176.

44. Art. 22.3 LCIA states that where the parties have made no choice of law, the Arbitral Tribunal shall apply the rules of law, which it finds appropriate.

45. As stated in Interim Award of September 23, 1982 in Dow Chemical France et al. v. ISOVER Saint Gobain, ICC Award No. 4131, referred in ICA Yearbook 1984.

46. See the ICC Award No. 6519, Clunet 1991 where the arbitrators applied the Dow Chemical doctrine and ICC arbitration No. 5721, Clunet 1990 where the arbitrators referred to the Dow Chemical doctrine. Further, the ISCID Proceedings in re Holiday Inns/Occidental Petroleum v. Government of Morocco reported in British Yearbook of International Law and the ISCID Award AMCO ASIA Corporation et al v. Indonesia, September 25, 1983 reported in International Legal Materials is based on the principle of economic reality.

47. The arbitration agreement was concluded at 24 February 1998 at the latest as stated under Issue 2, I.

48. The Claimant owned 51 % of the stock in Food Imports as stated in the Claimant's Exhibit No. 13 and Procedural Order No. 2, paragraph 54.

49. According to European Community Seventh Corporate Directive 83/349/EEC of 13 June 1983, the definition of a parent company is a company having controlling influence on another company. Owning more than 50 % of the stock of another company gives decisive influence on that company. The fact that financial results were not consolidated for tax or any other purpose does not deprive the Claimant its status as parent company as this is not a relevant criterion.

50. As the telephone conversation on 19 February 1998 was on the Claimants initiative.

51. The main contract was entered into on the Claimants initiative as stated under Section 3. See Defendant's Exhibit No. 1 where the Respondent was told that the Claimant was looking for 6,000 tons of standard feed wheat.

52. This obligation is stated in Claimant's Exhibit No. 1.

53. See Claimant's Exhibit No. 5.

54. See ICC Award No. 6519, Clunet 1991; Where the Tribunal stated active participation despite the termination of the contract shortly after its conclusion. See further Berger, p. 163.

55. See Berger, pp. 159.

56. See Fung Sang Trading Ltd. v. Kai Sun Sea Products, High Court of Hong Kong, CLOUT abstract 20, finds that: " ..it was first for the arbitral tribunal to decide on its jurisdiction .. the decision of the arbitral tribunal was neither final nor exclusive but subject to immediate review under Art. 16 (3) MAL.." and Russian Federation: Moscow City Court, 13 December 1994, CLOUT abstract 147, finds that: "The court confirmed the right of the Arbitral Tribunal under article 16(1) MAL to rule on its own jurisdiction.."

57. The doctrine of kompetenz-kompetenz implies that the Tribunal is entitled to determine its own jurisdiction, see further Redfern & Hunter, p. 176.

58. Art. 23.1 LCIA: " The Arbitral Tribunal shall have the power to rule on its own jurisdiction .."

59. Art. 16(1) MAL: " The Arbitral Tribunal may rule on its own jurisdiction …."

60. Statement of Defense, paragraph 1.

61. Art. 16(1) MAL: "..jurisdiction..any objections.." and Art. 23.1 LCIA: "…the power to rule..any objections.."

62. See supra footnote 43.

63. Art. 23.1 LCIA reeds: ".. an arbitration clause which forms part of ... another agreement shall be treated as an arbitration agreement independent of that other agreement".

64. Art 16 (1) MAL reeds: "..an arbitration clause which forms part of a contract shall be treated as an agreement independent of the other terms of the contract".

65. Statement of Defense, paragraph 1

66. Both Danubia and Mediterrano are Contracting States to the CISG. See Request for Arbitration, part III, paragraph 8.

67. The parties intended to incorporate the DFGA Standard Conditions of Sale No. 5 and thus, provided that there was a binding contract between the parties the CISG applies by virtue of the choice-of-law clause in the DFGA Standard Conditions of Sale No. 5 in accordance with Art. 1(1)(b) CISG.

68. The answer to this can also be derived from Art. 18(2) CISG.

69. Some authorities see specificity and definiteness as subsets of the more general requirement that the offer must indicate an intention to bound in case of acceptance. See Honnold I, no. 133: The basic criteria for an offer are the indicating of an intention to bind. Two factors can be taken into account when deciding the intention to be bound, the number of people addressed and the definiteness of the proposal.

70. See Claimant's Exhibit No. 1 and Defendant's Exhibit No. 1, which concur with regards to this issue.

71. See Defendant's Exhibit No. 1.

72. According to Art. 8(2) CISG a objective test must be applied and thereby a statement must be interpreted according to the understanding a reasonable person of the same kind as the other party would have had.

73. Schlechtriem, Art. 14 no. 12 and Lookofsky I, § 3-2.

74. According to Art. 9(1) CISG the parties are bound by any practices ton which they have agreed or established between themselves.

75. See Procedural Order No. 2, paragraph 5.

76. See Honnold II, no. 66; "The Convention does not address the complex issues that underlie questions of agency and authority." See also Appellationsgericht Tessin no. 12.95.00300 d. 12/2-1996 reported in Unilex; Agency is a matter excluded from the scope of the CISG and therefore the Court applied domestic law to the case by virtue of Art. 4 CISG.

77. See Procedural Order No. 2, paragraph 3.

78. See http://www.unidroit.org/english/implement/i-83.htm; The CAISG enters into force when accepted by ten contracting states.

79. Dixon, p. 57, under Art. 18 of the Vienna Convention 1969 a party to a Convention is obliged to refrain from acts which would defeat the object and purpose of a Convention in the period between ratifying a Convention and entry into force of a Convention.

80. See preamble to the CAISG, which states that the objectives of the CISG must be kept in mind when applying this convention.

81. According to Art. 8(2) CISG the statements made by a party should be interpreted according to the understanding of a reasonable person of the same kind and in the same circumstances as the other party.

82. See Schlechtriem-Junge, Art. 8 no. 4: "When interpreting a declaration of intent, the relevant issue is how the recipient of the declaration ought to have understood it when acting in good faith with due regard to accepted practice".

83. See Landgericht Hamburg no. 5 0 543/88 d. 26/9-1990 reported in Unilex; in order to determine whether a contract had been concluded between the seller and a German tradesman the court interpreted the statements and conduct of the parties according to Art. 8 CISG.

84. See Claimant's Exhibit No. 13.

85. See Claimant's Exhibit No. 12.

86. See Procedural Order No. 2, paragraph 32.

87. See Defendant's Exhibit No. 1; "He and I have spoken on the telephone a number of times in the past when he was purchasing grains for Food Imports, Co."

88. See Claimant's Exhibit No. 2.

89. See Statement of Defense, paragraph 5.

90. Even though the Claimant owned 51% of the stock in Food Imports and three out of nine members of the Governing Board in Food Imports also served in the Governing Board of the Claimant, see Claimant's Exhibit No. 13.

91. See Claimant's Exhibit No. 13 where it is stated that the two companies operated completely separately.

92. See Procedural Order No. 2, paragraph 14.

93. See Statement of Defense, paragraph 6.

94. See COMPROMEX M/21/95 d. 26/9-1990 reported in Unilex d. 26/9-1990; an intense exchange of letters between two firms was held to be sufficient to show the existence of a contract between the two firms.

95. See Claimant Exhibit No. 6. See also Claimant's Exhibit No. 9; "We insist that Grain Dealers, PLC deliver the entire 6.000 tons of standard feed wheat contracted for".

96. See Statement of Defense, paragraph 5.

97. Food Imports' silence or inactivity did not in itself amount to acceptance of a contract with the Respondent confer Art. 18(1) CISG.

98. See Claimant's Exhibit No. 5.

99. The negotiations can be seen in Claimant's Exhibit No. 5, 6 and 7.

100. According to Art. 29 CISG a contract can only be modified by the agreement of the parties.

101. See Statement of Defense, paragraph 10.

102. The letter of credit should be opened at least one month prior to the first day on which shipment may be made in accordance with the DFGA Standard Conditions of Sale No. 5.

103. In the Claimant's Exhibit No.13 it is stated that the foreign exporter always received payment from Imports and it is also stated in the Statement of Defense, paragraph 2 that the payment for the standard feed wheat was by means of a letter of credit opened by Imports even though the delivery was made directly to Food Imports customer.

104. See COMPROMEX M/21/95 d. 29/4-1996 reported in Unilex; The opening of a letter of credit in favour of the seller was considered to be proof of a concluded contract between the seller and the firm opening the letter of credit.

105. See Claimant's Exhibit No. 8.

106. See Statement of Defense, paragraph 11; "Dealers notified Processing that the letter of credit was not acceptable and requested Processing to have an amendment issued."

107. See Claimant's Exhibit No. 2.

108. See Schlechtriem, Art. 18 no. 4; where the confirmation refers to a contract which has already been concluded, the addressee must, in accordance with Art. 8(2) CISG, normally understand it to be a commercial letter of confirmation.

109. See Schlechtriem, Intro to Arts. 14-24 no. 4; "The conclusion of a contract as a result of a failure to respond to a commercial letter of confirmation is, in broad sense, one means of establishing contractual agreement."

110. The principle of good faith as a general principle of interpretation is derived from Art. 7(1) CISG, see Schlechtriem-Herber, Art. 7 no. 15-18 and Lookofsky I, §2-10. The good faith interpretation rule has been cited in Arbitral Award no. SCH-4318, see infra footnote.

111. See COMPROMEX award of 30 November 1998 reported in CISGW3; Principle of good faith imposes upon the parties a standard of behaviour in accordance with the principle of good faith. This view is also supported by Bianca/Bonell, p. 84-85.

112. Art. 18(1) CISG states that silence in itself does not amount to acceptance, however silence may amount to acceptance when linked to other circumstances, see Schlechtriem, Art. 18 no. 9 and Honnold II, no. 160; "In special circumstances silence may constitute acceptance". Furthermore, there is a general principle requiring a party to inform another who is known to be subject to a misapprehension, stated from Honnold II, no. 100.

113. See Oberlandesgericht Koblenz 2 U 31/96 d. 31/1-1997 reported in Unilex; a declaration from the buyer could not be interpreted as a declaration of avoidance as the subsequent conduct of the buyer was incompatible with such an interpretation (Art. 8(3) CISG).

114. See Defendant's Exhibit No. 2; "..However, our contract is with Food Imports..".

115. Schlechtriem-Junge, Art. 8 no. 6 suggests that when there is a conflict between a party's declaration and the same party's subsequent conduct, it is the actual conduct which determines the meaning of his declaration; protestatio facto contrario non valet. "That is in conformity with the principle of good faith, which is decisive even where interpretation is made subjectively by reference to a party's own intention, because that is the understanding which a reasonable recipient of the declaration would have. The legal basis for such a rule can be derived form Art. 7(1), which refers to "the observance of good faith in international trade" and therefore expresses a general principle of interpretation".

116. See Honnold I, no. 132.1; "In short, the Convention accommodates both the simple exchange of two communications and also the development of a contract when it is impossible to isolate an "offer" and "acceptance"."

117. See Honnold I, no. 170.1; The transactions examined, as a whole, is required by the CISG 18(1) and (3), 16(2), 8(1), 8(2), 9(1), and 29(2).

118. See Honnold I, no. 99; Reliance on representations of another party is a general principle on which the CISG is based as it can be derived from Arts. 16(2) and 29(2). See also Schlechtriem, Art. 16 no. 11: Art. 16(2)b expresses the principle that a person should not act in a contradictory manner. It causes the offeror to bound by the reliance, which he has induced. See Bernstein-Lookofsky, § 2-11 "Art. 7(2) authorises decisions based on a broader principle which can be derived from one or more CISG rules."

119. See Internationales Schiedsgericht der Bundeskammer der gewerblichen Wirtschaft Wien, arbitral award no. SCH-4318 d. 15/6-1994 reported in Unilex; a seller was estopped from setting up the defense that notice given by the buyer was not timely as the seller had behaved in such a way that the buyer was led to believe that the seller would not raise the defense. Art. 7(2) was applied, and - referring to Arts. 16(2)(b) and 29(2) CISG - it was held that estoppel (venire contra factum proprium) is a general principle underlying CISG.

120. In accordance with Art. 7(1) CISG, See Hungarian Chamber of Commerce and Industry Court of Arbitration VB/94124 d. 17/1-1995 reported in Unilex; the observance of good faith is not only a criterion to be used in the interpretation of CISG but is also a standard to be observed by the parties in the performance of the contract.

121. See Bernstein/Lookofsky, § 3-6: Reasonable and foreseeable acts in reliance deserve protection under the CISG.

122. See supra footnote.

123. See Claimant's Exhibit No. 5.

124. See Claimant's Exhibits No. 2 and Defendant's Exhibit No. 2.

125. See Claimant's Exhibit No. 6.

126. See Claimant's Exhibit No. 11.

127. See Claimant's Exhibit No. 5.

128. See supra Section 4.I.1.

129. See Oberlandesgericht Düsseldorf, 17 U 82/93 reported in CLOUT case 48; The seller was obligated to deliver goods of the quantity as required by the contract. Lookofsky I, § 4-4; In the mentioned case the delivery of less than 1,000 tons of cucumbers should be interpreted as a breach of contract.

130. Art. 25 CISG contains the definition of a fundamental breach, which is a breach that substantially deprives the aggrieved party of what it was entitled to under the contract.

131. See Claimant's Exhibit No. 8.

132. See Claimant's Exhibit No. 5.

133. See Claimant's Exhibit No. 10.

134. Art. 26 CISG states that a declaration of avoidance is effective only if notice is given to the other party.

135. According to Honsell-Schnyder/Straub, Art. 72, no. 46 "Gemäß Abs. 3 entfällt die Pflicht zur Ankündigung der Aufhebung bei Vorliegen einer Erfüllungsverweigerung durch die Gegenpartei." [There is no duty to notify pursuant Art. 72(3), if one party declares its unwillingness to perform].

136. See Claimant's Exhibit No. 11.

137. Art. 72 (2) CISG.

138. See Schlechtriem, Art. 79 no. 5.

139. Oberlandesgericht Hamburg 1 U 167/95 reported in Unilex; Termination does not constitute a prerequisite for the application of Art. 75 CISG when termination is in any case possible and it is undoubtedly clear that the other party will not perform its obligation (in the case at hand, the seller had expressly stated, that its impossibility to deliver within the fixed time).

140. Enderlein/Maskow, Art. 75 no. 3: "The substitute transaction has to be effected within a reasonable time. This is to prevent the loss from further increasing under worsening market conditions."

141. See Procedural Order 2, paragraph 47. The world market price had reached the price of $ 75,00 pr. ton by 21 May 1998.

142. See Enderlein/Maskow, Art. 7 no. 5; What is reasonable has to be interpreted in accordance with the observance of good faith pursuant to Art. 7(1).

143. See Tribunal of International Commercial Arbitration at the Russian Federation Chamber of Commerce and Industry Arbitral award in case No. 155/1994 of 16 March 1995,CLOUT case 140 in which the extend of damages on the basis of the difference between the contract price and the replacement purchase price was consistent with the provisions laid down in Art. 74 CISG for determining the amount of damages.

144. See Oberlandesgericht Köln, 08.01.1997, 27 U 58/96, reported in UNILEX "Art. 74 Abs. 1 Satz 2 CISG schränkt die Schadensersatzpflicht lediglich dahin ein, daß der Schaden den Verlust nicht übersteigen darf, den die vertragsbrüchige Partei bei Vertragsschluß als mögliche Folge der Vertragsverletzung vorausgesehen hat oder unter Berücksichtigung der Umstände, die sie kannte oder kennen mußte, hätte voraussehen können. Daß die Beklagte bei einer Zurückbehaltung der Fässer Häute durch ein Drittunternehmen werde millen lassen müssen, war für die Klägerin ersichtlich." [It is foreseeable that one has to make alternate transactions in case of breach of the contract].

145. See Enderlein/Maskow, Art. 74 no. 10 states that "already in the jurisdiction in regard of ULIS, which in Art. 82 contained the same rule of foreseeability [as the CISG], the following cases became apparent: a) the cost of a substitute transaction and the loss of resale profit are foreseeable..."

146. See Schlechtriem, Art. 78 no. 15 and Honsell-Magnus, Art. 78 no. 5.

147. See Internationales Schiedsgericht der Bundeskammer der gewerblichen Wirtschaft - Wien (Vienna), Austria, SCH - 4366 reported in Unilex, in which the arbitratiors referring to Arts. 78 and 74 found that full compensation is one of the general principles underlying the CISG.

148. See Thiele, p. 33; Even if the creditor did not have to borrow money, it is nevertheless entitled to the interest it lost by not being able to invest the money owed to it.

149. See Honnold II, No. 422, Staudinger-Magnus Art. 78, no. 8, and Enderlein/Maskow, Art. 78 no. 4.2.

150. Art 26.6 LCIA which gives the Tribunal the discretion to set any appropriate period from which interest accrues..

151. Delchi Carrier, SpA v. Rotorex Corp., CLOUT case 85.

152. Art. 7(2) CISG states that matters not settled but governed by the CISG are to be interpreted in conformity with the general principles on which the Convention is based.

153. See Magnus, p. 493 "... Ergebnisse können deshalb, soweit sie allgemeine, dem CISG nicht unmittelbar zu entnehmende Grundsätze formulieren, zur Lückenfüllung der Konvention verwendet werden." [The UNIDROIT principles can be used for filling the gaps of the Convention, as long as they express CISG's general principles].

154. nternationales Schiedsgericht der Bundeskammer der gewerblichen Wirtschaft, Wien, Schiedssprüche SCH-4318 and SCH-4366 of 15 June 1994, ICC Award No. 8128 of 1995 reported in Unilex both refer to the UNIDROIT Principles in order to fill a gap in CISG.

155. See UNIDROIT text & comments Art. 7.4.2 "In specifying the harm for which damages are recoverable, para. (1) of this article, following the rule laid down in Art. 74 CISG, states that the aggrieved party is entitled to compensation in respect not only of loss which it has suffered, but also of any gain of which it has been deprived as a consequence of the non-performance."

156. See Bonell in A New Approach to International Commercial Contracts.

157. See Honnold II, No. 403; "the standard for damages under the CISG is designed to place the aggrieved party in as good a position as if the other party had properly performed the contract.... Art. 74 drives home the convention's unified approach to the parties obligations and to remedies for breach."

158. Delchi Carrier, SpA v. Rotorex Corp. CLOUT case 85; Honsell-Magnus, Art. 78 no. 1 "Der Gläubiger soll stets einen Ausgleich für die entgangene Kapitalnutzung haben." [The creditor shall always get compensation for not being able to invest the money].

159. See Thiele, pp. 8-9, states that it is a question solved by the application of Art 7(1)

160. See Thiele, pp. 11-12, states that regardless of whether the purpose of Art 78 is to prevent unjust enrichment or protect and indemnify the creditor, both purposes are best served when interest begins to accrue from the time of the breach of the contract.

161. See infra Section 5.V.1.

162. See Oberlandesgericht Düsseldorf 17 U 146/93 reported in CISGW3; "Der dabei seit dem der Vertragsaufhebung verstrichene Zeitraum von rund 2 Monaten ist noch als angemessen im Sinne des Artikel 75 CISG ansusehen. Die erzielten Preise von 50.000 LIT pro Paar statt der vertraglich vereinbarten 105.000 bis 299.000 LIT sind ebenfalls noch angemessen i.S.d. Art. 75 CISG. Auch kann nicht festgestellt werden, daß die Preiseinbuße auf einer Verletzung der Schadensminderungspflicht der Klägerin aus Artikel 77 CISG beruht." [In the court's view, a resale nearly 2 months after avoidance still succeeded within reasonable time and was no breach of the plaintiff's obligation under Art. 77 CISG to mitigate the loss].

163. See Oberlandesgericht Hamburg 1 U 167/95 reported in Unilex; The buyer's substitute purchase at a higher price was not in contrast with an obligation to mitigate damages according to Art. 77 CISG, as the substitute transaction had been concluded after a significant rise in the market price had already taken place.

164. See Procedural Order No. 2, paragraph 47.

165. See infra Section 5.V.1.

166. See Procedural Order No. 2, paragraph 21.

167. See Procedural Order No. 2, paragraph 51.

168. See Procedural Order No. 2, paragraph 12.

169. See Enderlein/Maskow, Art. 7 no. 5; Observance of the principle of good faith means to display such conduct as is normal among businessman.

170. See Weitzmann: "Thus, under the Convention, excuse should apply only to "impediments" that prevent performance - not to more wide-ranging "circumstances" that might make performance merely difficult or unprofitable."

171. See Tribunale Civile di Monza 14-01-1993 reported in Unilex; in which the seller could not have relied on hardship as a ground for avoidance, as CISG does not contemplate this as a remedy either in Art. 79 or elsewhere.

172. See Claimant's Exhibit No. 6.

173. See Claimant's Exhibit No. 4; The government allocation system entered into force on 5 May 1998.

174. See Claimant's Exhibit No. 4.

175. See Honsell-Magnus, Art. 79 no. 14; According to Trib. Monza Giuris It. 1994 I 145 "... nach Trib. Monza Giuris It. 1994 I 145 mit Anm. Bonell genügt eine Verteuerung um 30% aber noch nicht." [A price increase of 30% does not amount to a barrier].

176. See Claimant's Exhibit No. 7.

177. See Rechtbank van Koophandel, Hasselt AR 1849/94 Vital Berry Marketing NV v. Dira-Frost NV reported in Unilex.

178. See Bernstein/Lookofsky, § 6-13: "...nearly all potential impediments to performance - even wars fires and embargoes ... - are foreseeable to some degree... Price increases, even dramatic ones, are generally foreseeable."

179. See Claimant's Exhibit No. 7.

180. See Procedural Order No. 2, paragraph 50: "Contracts for the full amount of 120,000 tons for which DEALERS had applied to service regular customers were entered into after 17 April 1998. All of those contracts provided that they were "subject to availability" of sufficient wheat."

181. See Schlechtriem, Art. 79, no. 30 and Rimke, IV C 1 b (1); "In the case of generic goods the seller always bears the risk of procuring the goods."

182. See Oberlandesgericht Hamburg 1 U 167/95; In case of replaceable goods the seller could only be exempted from its liability when it is impossible to find on the market goods of similar quality.

183. See Berger, p. 616; "The arbitrator's decision on costs is .. an integral part of their decision on the merits of the case".

184. Hereby including costs such as the registration fee £1.500 and the fees and expenses of the tribunal, as calculated on the basis of time and expenses spend in relation to making the award. See LCIA Rules, Schedule of Fees and Costs, paragraph 4.

185. See also Berger, p. 617; "in principle, the costs of the arbitration .. are borne by the unsuccessful party".

186. See Berger, p. 617; "In awarding the costs the arbitrators may also take into account the conduct of the parties during the arbitration, especially obstructionist tactics of one party which have caused substantial delay and costs and the legitimacy of a Respondent's resistance to the claim".